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N500bn Real sector fund:CBN to issue implementation modalities next week

By Babajide Komolafe

The Central Bank of Nigeria (CBN) will next week release the modalities for the implementation of the N500 billion real sector funds.

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The apex bank will hold a special meeting of its Monetary Policy Committee (MPC) Thursday next week to ratify the report of the technical committee for the implementation of the fund.

A statement on the website of the CBN in this regard said, “A special meeting of the Monetary Policy Committee of the Central Bank of Nigeria will hold on 15th April, 2010 in accordance with the communiqué of the 213th MPC meeting.”
The Fund was specifically set up for investment in power projects dedicated to industrial clusters.

The technical committee comprise the CBN, the Bankers’ Committee Sub-committee on Economic Development, Bank of Industry, Manufacturers Association of Nigeria (MAN), and National Association of Small and Medium Enterprises (NASME).

Announcing the establishment of the fund at  the end of its 213th  meeting held March 1st to 2nd, the MPC in communiqué stated, “  To continue with the quantitative easing policy by providing N500 billion facility for investment in debentures issued by the Bank of Industry (BOI) in accordance with Section 31 of the CBN Act 2007,
for investment in emergency power projects dedicated to industrial clusters.

The funds are to be channeled through the Bank of Industry for on-lending to the DMBs at a maximum interest rate of 1.0 per cent for disbursement of loans with a tenor of 10 – 15 years at concessionary interest rate of not more than 7.0 per cent.

The  Committee also approved in principle the extension of this facility to DMBs for the purpose of refinancing/ restructuring existing portfolios to manufacturers. However, the final approval for this will come after the consideration of the report of a technical committee to be set up to work out the modalities, for implementation within one month.

Membership of the committee comprises the CBN, the Bankers’ Committee Sub-committee on Economic Development, Bank of Industry, Manufacturers Association of Nigeria (MAN), and National Association of Small and Medium Enterprises (NASME). The African

Finance Corporation (AFC) will serve as technical adviser on the power project. In the case of the power projects, the following  projects of the Federal Government will be covered under this facility subject to their being restructured into commercially viable projects on which banks are willing to take credit risks:

Lagos (500 MW); Kano (250 MW); Onitsha/Nnewi (200 MW); Port Harcourt/Aba (200MW); Kaduna (225 MW);  Funtua/Gusua/MFashi/Zaria (200 MW); Lokoja (200MW); and Maiduguri/Gombe/Bauchi (200 MW).  ther power projects currently being financed by banks may also be refinanced from the fund. However, banks will be required to secure the funds drawn with eligible securities.

In addition, real sector projects certified bankable that emanate from the State Governors’ engagement with the Bankers’ Committee in line with the outcome of the Enugu Retreat will be accommodated under the facility.


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